Assume the following discount function, which is a set of discount factors: d(0.5) = 0.990, d(1.0) = 0.970, d(1.5) = 0.960, d(2.0) = 0.950. A U.S. Treasury bond pays a semi-annual coupon at a rate of 5.0% per annum and matures with a face value of $1,000 in eighteen months (T = 1.5 years). What is the price of the bond?

Hi pinalkaria87,Since the bond has a semi-annual coupon, the $25. Since the discounting factors are given,The price of the bond is:25*0.990+25*0.970+1025*0.96 = 1033In the future, please mention the exact part of the question where you have a problem so we can address that exact doubt.

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